DCF Studio

    0836.HK · HKG · Utilities

    China Resources Power Holdings Company Limited

    Also onConsensus Drift

    Implied value per share

    HKD 18.12

    Market price

    HKD 18.89

    Implied upside

    -4.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 40.6% of revenue against depreciation of 15.4%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: HKD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    HKD 18.12-4.1%
    Exit multiple
    HKD -8.43-144.6%
    Market price
    HKD 18.89

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (HKD). Outflows negative.

    -10276435152-51382175760FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayHKD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueHKD 101.6bnHKD 101.2bnHKD 100.7bnHKD 100.3bnHKD 99.9bn-0.4%
    EBITHKD 17.9bnHKD 17.8bnHKD 17.7bnHKD 17.7bnHKD 17.6bn-0.4%
    NOPATHKD 14.9bnHKD 14.9bnHKD 14.8bnHKD 14.8bnHKD 14.7bn-0.4%
    Add depreciation & amortisationHKD 15.6bnHKD 15.6bnHKD 15.5bnHKD 15.4bnHKD 15.4bn-0.4%
    Less capital expenditureHKD -41.3bnHKD -41.1bnHKD -40.9bnHKD -40.8bnHKD -40.6bn-0.4%
    Less increase in working capitalHKD 428.1mHKD 426.3mHKD 424.5mHKD 422.8mHKD 421.0m+0.4%
    Free cashflow to firmHKD -10.3bnHKD -10.2bnHKD -10.2bnHKD -10.1bnHKD -10.1bn+0.4%
    Discount factor0.97840.93650.89650.85820.8215-
    Present valueHKD -10.1bnHKD -9.6bnHKD -9.1bnHKD -8.7bnHKD -8.3bn+4.7%
    Present Value Of The ForecastHKD -45.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%HKD assumption - no free live source available for this market (assumption)
    Equity risk premium7.00%Market assumption
    Beta0.753Reported 0.632, pulled toward 1.0 (Blume)
    Cost of equity8.47%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationHKD 97.8bn30.9% of capital
    Total debtHKD 218.2bn69.1% of capital, book value as a proxy
    Tax rate16.5%Effective, capped at statutory
    WACC4.47%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareHKD 18.12

    115% of EV

    Forecast FCFF, final year
    HKD -10.1bn
    Capex at depreciation, working capital in reinvestment
    HKD 14.7bn
    Less reinvestment at g/ROIC (45.0% of NOPAT)
    HKD -6.6bn
    Capitalised
    HKD 8.1bn
    ROIC (reported)
    5.6%
    Terminal value, undiscounted
    HKD 421.4bn
    Terminal value, discounted
    HKD 346.1bn
    Enterprise value
    HKD 300.3bn
    Less net debt
    HKD 206.6bn
    Equity value
    HKD 93.8bn

    Exit at 7.7x EBITDA

    Value per shareHKD -8.43

    128% of EV

    Terminal value, undiscounted
    HKD 254.1bn
    Terminal value, discounted
    HKD 208.7bn
    Enterprise value
    HKD 162.9bn
    Less net debt
    HKD 206.6bn
    Equity value
    HKD -43.6bn

    Sensitivity

    Value per share (HKD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    2.47%145.68306.17———
    3.47%42.7759.4193.03198.08—
    4.47%9.4912.9718.1226.6243.70
    5.47%-6.81-6.47-6.07-5.60-4.99
    6.47%-14.76-14.59-14.42-14.26-14.09

    Outlined: this model. Green text: above today's price of 18.89. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-0.4%-0.1%+0.3pp
    EBIT margin17.6%17.8%+0.2pp
    Discount rate4.5%4.4%-0.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.